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Today's Giant Pharmaceutical Deal Just Became an Issue in the US Presidential Race

Democratic presidential candidates were quick to bash the massive pharmaceutical deal made today between Pfizer Inc and Allergan.

by Reuters and VICE News
Nov 23 2015, 8:20pm

Larry W. Smith/EPA

The US Democratic presidential candidates were quick to bash the massive pharmaceutical deal made today between Pfizer Inc and Allergan, proving that debates about drugs aren't just limited to illegal ones during this campaign season. 

Pfizer Inc, the maker of Viagra and Lipitor, announced today they are buying the company Allergan PLC in a transaction valued at about $160 billion. The complex deal, the biggest ever in the healthcare sector, will allow Pfizer to shift its legal base to Ireland in a so-called "inversion" that would reduce its tax rate.

Clinton said today she would propose steps to prevent tax inversions and called on regulators to take tougher action.

"For too long, powerful corporations have exploited loopholes that allow them to hide earnings abroad to lower their taxes. Now Pfizer is trying to reduce its tax bill even further," Clinton said in a statement today.

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"This proposed merger, and so-called 'inversions' by other companies, will leave US taxpayers holding the bag," Clinton's statement continued. She added that she would fight to crack down on inversions if elected president.

Vermont Senator Sanders also slammed the deal, calling it a "disaster" and urging the Obama Administration to step in to block it.

"The Pfizer-Allergan merger would be a disaster for American consumers who already pay the highest prices in the world for prescription drugs," Sanders said in a statement. 

Martin O'Malley, the third and trailing Democratic candidate hopped on the anti-inversion bandwagon as well, calling the merger "fundamentally unfair, and a prime example of how our capitalist economy is not supposed to work." 

The pharmaceutical giants said the combined company was expected to maintain the Irish tax rate. Ireland's corporate tax rate of 12.5 percent is much more attractive to companies when compared to the US tax rate of 35 percent, which is among the highest in the world.

The US Treasury Department, concerned about losing tax revenue, has been taking steps to clamp down on tax inversion deals but experts have said these moves will do little to prevent Pfizer from shifting its domicile.

The White House declined to comment specifically on Pfizer's acquisition of Allergan but said Congress should take legislative action to prevent deals where companies lower their taxes by reincorporating overseas.

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Democrats have generally been far quicker to condemn tax inversions than Republicans, with one notable exception. In a break from the rest of the GOP, Donald Trump has been openly critical of tax inversions and has pushed for US corporations to pay the same flat tax regardless of where in the world they go.

"These corporate inversions take capital and, more importantly, jobs offshore," Trump said in October. "We need leadership in Washington to get the tax code changed so companies will be coming to America, not looking for ways to leave."

The other GOP candidates has been relatively quiet about the Pfizer deal today.